Initiatives 1100 and 1105
In the tasting room and everywhere we go people have been asking us about
Washington State Initiatives 1100 and 1105.
Although it’s always risky to have a public opinion on something
political, we thought that we would step forward and break down I1100 and how it
will affect our lives. As some of
you know, we are not only the sole owners and operators of Waterville Winery,
but also the owners of Ledbetter Distributing, which Lisa is the sole operator
of. Thanks to Sean Sullivan at
Washington Wine Report (http://www.wawinereport.com)
for inspiring us to do this. His
careful research that he published made our own that much easier. Below is our own interpretation and
opinion of the initiatives. Without
further ado…
Quick Background
We drink. Let's just be up front
about this. We both drink and enjoy
alcoholic beverages on a regular basis.
We have a winery and beer distributorship because we drink. Our enjoyment of great beer and wine
is why we started both businesses.
After a lifelong dream of starting a winery in North Central Washington (NCW),
we officially opened up Waterville Winery.
The primary driver for us was the idea of creating wine for the people. Essentially we wanted to make great
wine and sell it at affordable prices.
In the spring of 2010 we started a new business called Ledbetter
Distributing. Ledbetter's mission:
"Providing Great Beer to Thirsty People".
The primary driver for this was the fact that NCW is somewhat of a
wasteland when it comes to finding craft beer.
The Initiatives
We are not going to give you opinion and break down on the tax-related points of
both initiatives. Too many, better
informed, people have done a great job of that than we could ever hope to do.
I-1105 – Initiative 1105 is a crock. It was brought forth by the
Washington Beer and Wine Wholesalers, of which we aren't a part of.
Owning and running a business should be easy.
If you are a manufacturer of a product, you should be able to sell your
product to whomever you think is going to provide the best value for you.
·
That might be directly to the consumer, in state
or out of state.
·
It might be to a big warehouse store like Costco
or to a small mini-mart that you ship 3 bottles of wine to every two weeks.
·
It might also be to a distributor who you feel is
working hard to grow your product and has your best interests in mind.
To limit your choice of who you can sell to seems as anti-business as you can
get. We hope that the booze
manufacturers who have products with the distributors behind this initiative are
taking note.
BAD
I-1100 – This is the initiative that
keeps us up at night. It has so
many changes to the liquor laws in Washington State that it cannot possibly
please everyone except for those few companies that actually crafted the
initiative. Let’s break down some
of the major highlights and we’ll talk about how we feel this will affect us as
consumers, business people, and friends of people who will be affected.
1.
Get the
state out of the spirits business.
This is a two parter because of the downstream affect that would occur:
a.
Get the
state out if the spirits business.
This is long overdue. The state
does a VERY GOOD job in providing a huge selection of spirits, and for that we
are thankful. But, they do only a
fair job at providing accessibility and a POOR job at working with in-state
distilleries, breweries and wineries to put those products on the shelf. If this was all that I-1100 was
about, we’d be writing a check from our personal account to help the cause.
GOOD
b.
Terminate
the contracts with the private stores that sell spirits. This isn’t too bad of a deal for
the private stores. Our own local
drug store privately contracts through the state and here’s how they will be
affected.
·
In December 31, 2011 they will automatically get a FREE General
Liquor Retailer’s license which will be valid through December 31, 2012 without
payment of any fee.
·
On January 1, 2013 they will have to pay $1,000 per year for
that license (currently that price is $111 per year). This is a nice provision for them,
although their annual license cost increases dramatically.
They will lose the ability to sell, at wholesale prices, liquor to the local
restaurants and bars. They also
lose something that is tough to measure and even tougher to estimate:
accessibility. Currently, they have over 3,000
different types of spirits that they can order from the state distribution
warehouse. There are an additional
5,000 plus items that can be ordered from the state via special order. In the future it’s tough to say
which distribution companies will actually deliver to our small town, let alone
what types of spirits they will have.
Our local store relies on selling spirits to add to their income. If that extra income drops
significantly, they will have to find something else to offset it.
BAD
MIXED
2.
Any
Washington distiller can distribute and sell their own product. This is how it works for wineries
and breweries now, this is a good thing and how the world should work. We’ve watched what
It’s 5 O’Clock Somewhere
distillery has gone through with the state and it’s been painful to see how they
have been treated by the single distributor in the state that they are allowed
to sell to. GOOD
3.
Repeal of
uniform pricing of all liquor products.
It puts alcohol products on the same playing field as every other product
on the store shelf. This one kind
of hurts. It would allow us to sell
our wine for one price to Store A and sell it for a different price to Store B. This primarily helps large companies
who can afford to cut prices because of volume.
The result is that it will lower prices for beverages while, in our
opinion, reducing and contracting those beverages that are available to buy. Less stuff to buy, but it’s cheaper.
MIXED
4.
Repeal
laws that require retailers to pay cash on delivery. For purely selfish reasons, this one
really hurts us. Right now we don’t
have to extend credit, send out payment reminder letters or take anyone to
collections. Sure, we could put a
policy in place for our companies that all goods are COD, but there will be some
stores where that is a deal breaker.
This one will add more work to an already over-loaded work day.
BAD
5.
Repeal
laws that regulate the giving of promotional items to retailers. Again, for purely selfish
reasons we don’t like this one bit… this will hurt the little guy. If repealed, a store can require
that we provide promotional signs, coolers, etc., before they will buy our
product. Coors and Mondovi can
afford to play that game, the little winery can’t. If a large distributor provides free
beer coolers to the local store with the condition that only their products can
be stored in it where does that leave room for other products? Yes, we could also play that game,
but we are a super small company whose only interest is getting great products
at fair prices into the hands of consumers that want them. We don’t have the extra money lying
around to do these types of things.
This is bad for the consumer.
BAD
(note
Paul Beveridge
says that this is not an issue because of federal and state antitrust laws. We have not confirmed if this is
true or not.)
6.
Jack up
(way up) the prices of all licenses and add an application fee for any new
licensees. OUCH, this one is
way out of left field. Washington
has always been all over the map when it comes to license fees and it doesn’t
appear it’s going to get any better, just more expensive. Currently the annual license cost is
either $111 for a Wine/Beer specialty license or $160 for a Grocery Store
license. The distinction will now
go away and you will have a General Liquor Retailer’s license, which will cost
$1,000 per year. If you are a new
store and are applying for a new license, you will also have to pay a $1,000
application fee. Our current cost
for a Beer Distribution license is $660 per year. This will go up to $2,000 per year. And, if you are applying for a new
distribution license, there is a $2,000 application fee. The distribution license will no
longer be split into types of liquor, but will be a single license covering
beer, wine and spirits. The fee
schedule for retailers and non-retailers was already as broken as can be and
this simply adds to it.
BAD
Summary: People who drink, have, and will
continue to drink. Passage of
either initiative is not going to change that.
We started both businesses because we felt that consumers should have
access to quality products at reasonable prices.
As much as the passage of I-1100 helps our craft distilleries in our
state, it’s not enough to make us vote yes.
If I-1100 passes it will require us to make a significantly bigger
investment in our business, due to the increase in the distributor license fee.
Passage will simply make us always bring our A game in everything we do. We will never be able to compete
with the Australian or California wineries on price. We will never be able to compete
with the Columbia and Odom's of the world in purchasing shelf space or giving
free beer coolers to local stores.
We will continue to seek out passionate breweries that make great beer who are
interested in getting their beer in the hands of more stores and to the
consumers who appreciate great beer. For the winery, we will continue to slowly
grow our market and sell our wine wholesale only when we find a store who is
excited about our wine and what we are doing.
The final thing it would make us do is to start working with our local
representatives in changing some of the license fees in order to encourage small
business growth.
Initiative 1100
tries to do too many things at once, of which some are quite harmful to both
consumers and businesses in Washington State.
I-1100 is a bad idea.
Sorry we don’t currently have the ability for comments on our site. Please
email us and we will respond and
post your comment to our site.
Lisa Wareham
Matt Wareham
Owners of Waterville Winery and Ledbetter Distributing